The Weekly Gold Digger (May 15 2015)

This is a sample entry from Leslie Burton’s newsletter, The Weekly Gold Digger, published on Friday, May 15, 2015.

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The US Dollar has been the culprit blamed for pressuring the Gold market, so the inverse relationship remains intact.

The Gold market has all the characteristics of a potential breakout, yet it could be short-lived in light of the Fed’s affinity for speaking about the economy. The stimulus provided now from the Euro Zone, Japan and China are all supportive. If there is a delay in rate hikes in the US, we may see further upside action in the Gold. The range simply moves up. The Chinese Gold fix may be a boost for the metal that is typically seen as the fear and anxiety safe-haven product, but now may be the buyers choice trade. The Chinese love to buy Gold. China has sought to have their investment counselors suggest Gold to consumers as an investment product for years now. The Shanghai Gold Exchange (SGE) may have lofty plans for the metal which may be the boost that Gold needs to reclaim its former safe-haven value. The SGE may want to establish a yuan-denominated Gold fix price. China has craved to have the yuan become a premier currency to compete with the US Dollar. China has pursued the drawing rights from the International Monetary Fund (IMF) for years. It is thought that the People’s Bank of China may have expanded their Gold reserves to 3,000 tons perhaps. The China Gold Association reports that the Gold consumption may have increased by 326.68 metric tons in the first quarter. India may have reclaimed their top spot as the largest buyer due to jewelry sales. The International Monetary Fund (IMF) may hold 2,814 tons of Gold. It is suggested often to central banks that 4% to 10% of assets in Gold may be prudent. The Gold imports from Switzerland to China may have been around 46.4 metric tons in March. Switzerland may have imported 97.2 tons from the UK in March. Russia may have added 31.1 tons of Gold in March taking the reserves to 1,237.9 tons. The SPDR Gold Shares decreased by about 0.61% to 723.91 on Thursday. Gold ETF’s in general may have increased holdings of about 49.2 million ounces. According to the World Gold Council, the demand for Gold globally may have slipped by 1% to 1,079.3 tons in the first quarter. In 2014, the total demand for Gold amounted to 3,924 tons. Central banks may have purchased about 119.4 tons in the first quarter according to the World Gold Council. Gold in electronics were down 2% in the first quarter. Technology increased their Gold consumption by 4% to 12 tons in the same time frame. Mine production grew 2% year on year to 729 tons according to the World Gold Council.

Consumption of Gold was also down in 2014. India purchased 843 tons and China purchased 814 tons according to the World Gold Council. India had the 80/20 rule stopped in November and the tariffs are being worked on as well. The Bank of Greece sold 5,849 Sovereign coins in January. Globally, the central banks purchased about 477 tons of Gold. Russia purchased about 173 tons of Gold last year. There is now a Memorandum of Understanding between the Shanghai Exchange and the World Gold Council. Their mandate is primarily to facilitate the international Gold trading in China. Projections for growth in demand of the metal are quite lofty. The Shanghai Free Gold Exchange is operational. The Stock Exchange of Thailand is planning to establish a spot Gold exchange but talks with the Gold Traders Association are to continue. Thailand only imported about 159 tons into the country last year. The Kilobar Gold Contract on the Singapore Exchange was introduced. The annual outflows from the Gold backed ETF’s decreased to 159 tons in 2014. Global mined Gold Stocks average about 258 tons per month while the Shanghai exchange alone withdrew about 255 tons of Gold in January.

The Factory data has been weak perhaps due to the stronger US Dollar, the oil prices and/or the port strike. Industrial Production for April was at -0.3% while the previous reading had been -0.6%. The Capacity Utilization Rate was at 78.2% while the previous reading had been 78.4%. The Manufacturing was at 0.0% while the previous reading had been 0.1%. Consumer Sentiment for May was 88.6 while the previous reading had been 95.9. The decreased export demand is created by the stronger dollar and of course the port shutdown. The bad weather was indicative of the first quarter but the sentiment has rolled into the second quarter as the potential progress seems muted at this point. It is more a case of not stellar growth but growth simply not as bad as the first quarter. Oil prices may perhaps remain lower for the time being giving the consumer that extra spending money, but the consumer must feel confident enough in the economy to spend. The Fed still is viewing the US economy as gradually strengthening and the employment is anticipated to firm even more in the months ahead. Inflation remains muted and due to the previous weaker data, it is assumed that the Fed may not be quite as quick to pull out their tightening plan. The market has calmed with less commentary coming from the Fed and the weaker dollar means more sales to foreign buyers as the cheaper goods become more appealing. The recent GDP report had sent a message that the US economy has weakened, yet the Fed was quick to label the report as a transitory state due to hindrances to overcome such as the inclement weather conditions, weaker demand for goods, a stronger dollar and a dispute at a busy West Coast port. Crude oil may have been another hindrance as the energy companies have been impeded by soft demand and oversupply of energy products. US Fed Chair Janet Yellen now has to evaluate the economy’s stability and strength at the June 16th – 17th meeting. The Fed hike is now forecast by many analysts to begin to tighten in September or possibly even December. Some analysts are now saying that they have pushed their projections out to 2016! Inflation remains below the targeted 2%, so they must be reasonably confident that the target will be in range.

The Empire State Manufacturing Survey for May was at 3.09 while the previous reading had been -1.19. Industrial Production for April was at -0.3% while the previous reading had been -0.6%. The Capacity Utilization Rate was at 78.2% while the previous reading had been 78.4%. The Manufacturing was at 0.0% while the previous reading had been 0.1%. Consumer Sentiment for May was 88.6 while the previous reading had been 95.9. E-Commerce Retail Sales for Q1.15 change SAAR was 3.5% while the previous reading had been 2.3%. The Treasury International Capital for March of Foreign Demand for Long-Term US Securities was $17.6 billion while the previous reading had been $9.8 billion. The Initial Jobless Claims for the week of May 9th came in at 264,000 while the previous reading had been 265,000. The Continuing Claims were unchanged at 2.229 million. The PPI-FD for April was at -0.4% while the previous reading was 0.2%. The PPI-FD excluding food and energy was at -0.2% while the previous reading had been 0.2%. The PPI-FD excluding food, energy and trade services was at 0.1% while the previous reading had been 0.2%. The Bloomberg Consumer Comfort Index for the week of May 10th was at 43.5 while the previous reading had been 43.7. The Fed Balance Sheet for the week of May 13th was $4.501 trillion while the previous reading was $4.473 trillion. The Total Assets were $28.5 billion while the previous reading had been 1.2 billion. The Reserve Bank Credit was $6.3 billion while the previous reading was -$11.3 billion. The Money Supply for the week of May 4th was $27.6 billion while the previous reading had been -$27.4 billion. The Retail sales was at 0.0% while the previous reading had been 0.9%. The Retail Sales excluding automobiles was at 0.1% while the previous reading had been 0.4%. The Retail Sales excluding automobiles and gasoline was at 0.2% while the previous reading had been 0.5%. The MBA Mortgage Applications for the week of May 8th Composite Index was -3.5% while the previous reading had been -4.6%. The Purchase Index was -0.2% while the previous reading had been 1.0%. The Refinance Index was -6.0% while the previous reading had been -8.0%. Export Prices for April are forecast at 0.1% while the previous reading had been 0.1%. Import Prices for April were -0.3% while the previous reading had been -0.3%. Business Inventories for March were at 0.1% while the previous reading had been 0.3%. The NFIB Small Business Optimism Index for April was at 96.9 while the previous reading was 95.2. For further information on the NFIB, please visithttp://www.nfib.com/. The JOLTS or Job Openings and Labor Turnover Survey for March came in at 4.9948 million while the previous reading had been 5.133 million. Redbook Store Sales for the week of May 9th was at 2.1% while the previous reading was 1.6%. The Treasury Budget for April was at $156.7 billion while the previous reading was -$52.9 billion. The Nonfarm Payrolls for April came in at 223,000 while the previous reading had been 126,000. The Unemployment Rate is at 5.4% while the previous reading had been 5.5%. The Private Payrolls are at 213,000 while the previous reading had been 129,000. The Participation Rate is at 62.8% while the previous reading was 62.7%. The Average Hourly Earnings are at 0.1% while the previous reading had been 0.3%. The Average Workweek is at 34.5 hours unchanged from the previous reading. Wholesale Trade Inventories for March are at 0.1% while the previous reading was 0.3%. The Initial Jobless Claims came in up 3,000 new applicants for unemployment benefits at 265,000 while the previous reading had been 262,000. Continuing Claims data was down 28,000 to 2.228. The Challenger Job-Cut Report for April of announced layoffs was at 61,582 compared the last reading of 36,594. The Gallup US Payroll to Population for April was 43.9 while the previous reading was 44.1. The Bloomberg Consumer Comfort Index for the week of May 3rd was 43.7 while the previous reading was 44.7. Consumer Credit for March was at $20.5 billion while the previous reading had been $15.5 billion. The ADP Employment Report for April was 169,000 while the previous reading was 189,000. Productivity and Costs for Q1:15 Nonfarm Productivity was -1.9% while the previous reading had been -2.2%. Unit Labor Costs was 5.0% while the previous reading had been 4.1%. The Gallup US Job Creation Index for April was 31 while the previous reading had been 29. The MBA Mortgage Applications for the week of May 1st Composite Index was -4.6% while the previous reading was -2.3%. The Purchase Index was 1.0% while the previous reading had been 0.0%. The Refinance Index was -8.0% while the previous reading was -4.0%. The Treasury Quarterly Refunding Announcement was for a $64 billion total split between $24 billion in the 3-year notes, $24 billion in 10-year notes and $16 billion in 30-year bonds. The International Trade for March was -$51.4 billion while the previous reading was -$35.4 billion. The Gallup US ECI for April was -9 while the previous reading was -2. The Redbook Store Sales for the week of May 2nd was 1.6% while the previous reading was 1.4%. PMI Services Index for April was 57.4 while the previous reading was 59.2. The ISM Non-Manufacturing Composite Index for April was 57.8 while the previous reading was 56.5. The Gallup US Consumer Spending Measure for April was at $91 while the previous reading had been $86. Factory Orders for March were at 2.1% while the previous reading was 0.2% boosted by aircraft and motor vehicles. TD Ameritrade IMX for April was at 4.63 while the previous level was 4.75. The GDP for Q1a:2014 came in at 0.2% while the previous reading was 2.2%. The GDP Price Index was at -0.1% while the previous reading was 0.1%.

Gold Chart

The safe-haven properties of the Gold are perfect for those times of uncertainty and/or conflict in the world! The Gold (June) contract is in a bullish mode if it stays above $1171.70. A key consolidation area may be $1200.00 to $1250.00 for the moment. $1221.50 may be the comfort level. The range may be $1200.00 to $1250.00 for now. The main catalyst that may support the Gold would be Greece exiting the Euro Zone and/or perhaps any upset from the Fed deciding to hold off on the tightening until December or 2016. The stimulus in other parts of the world such as the Euro Zone is good support for Gold.

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